Bermuda-based Max Capital Group Ltd. announced last night thatit entered into an agreement to acquire Imagine Group (UK) Limited("Imagine Lloyd's"), a Lloyd's insurance operation, from ImagineInsurance Company Limited ("Imagine").

In addition to paying roughly ?11 million ($22 million) in cash,Max Capital said it will replace letters of credit totalingapproximately ?90 million ($179 million) that an affiliate ofImagine has provided to fund Imagine Lloyd's syndicatecommitments.

Imagine Lloyd's is part of Imagine Group Holdings, aBermuda-based holding company conducting specialty insurance andreinsurance activities through insurance and reinsurance entitiesin Barbados, Ireland and Lloyd's.

As part of the agreement, Max said it will acquire some ImagineLloyd's operations in Denmark and Japan.

Imagine Lloyd's, through Lloyd's Syndicates 1400, 2525 and 2526,underwrites a portfolio of specialty risks including propertycatastrophe, financial institutions, personal accident, employers'and public liability, and professional indemnity business.

Max Capital writes specialty insurance and reinsurance forcorporations, public entities, property-casualty insurance andlife-health insurers through operations in Bermuda, Ireland andthrough Max Specialty in the United States.

The London base of the acquired business will complement MaxCapital's current operations in these locations, Max Capitalsaid.

Calling the Lloyd's operation "an ideal fit for Max" in a pressstatement, Marty Becker, chairman and chief executive officer ofMax Capital, said, "We will further diversify our business andachieve access to the important benefits of Lloyd's marketparticipation."

The acquisition is conditioned on the receipt of variousapprovals including those from the Financial Services Authority andLloyd's.

Following completion of the transaction, Imagine Lloyd's isexpected to be re-branded as "Max Lloyd's Ltd."

Max Capital isn't the only Bermuda company to announce a Lloyd'sacquisition this month. Earlier this month, Ironshore said it wouldenter the Lloyd's market with the proposed purchase of PembrokeManaging Agency and Syndicate 4000 for ?17 million in cash--orabout $33.9 million at the latest exchange rate.

Back in the United States, American International Group alsoannounced a Lloyd's deal this month, acquiring Ascot UnderwritingHoldings Ltd., the managing agency of AIG's Lloyd's Syndicate1414.

AIG previously held a 40 percent minority interest in Ascot, andthis transaction involved an acceleration of its option to purchasethe agency in 2012.

In June, Max Capital announced an acquisition in the UnitedStates, with its Richmond, Va.-based specialty operation, MaxSpecialty Insurance, buying Commercial Guaranty Casualty Insurancefor an undisclosed amount.

Max said that deal would primarily support a previouslyannounced entry into inland and ocean marine underwriting and giveU.S. customers access to admitted paper.